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Credit Suisse pleads guilty in tax evasion probe

Credit Suisse assisted US clients in using sham entities to disguise undeclared accounts, failed to maintain US account information and destroyed records sent to U.S. clients, according to court papers. Photo: FABRICE COFFRINI

Credit Suisse pleaded guilty to helping Americans cheat on their taxes, making it the first bank in more than a decade to admit to a crime in a US courtroom and marking the end of a three-year probe of the Swiss firm.

The plea also signals a tougher posture by the Justice Department, which has faced criticism that it avoided pursuing large banks after the 2008 financial crisis because of the potential economic fallout.

The US Justice Department said that Credit Suisse has reached an agreement to pay $US2.5 billion ($US2.7 billion) to resolve the case, a person familiar with the matter has said. The penalty includes a $US715 million payment to New York's Department of Financial Services, a person with knowledge of the matter said. The state banking regulator also called for the termination of certain employees and an independent monitor, the person said.

Credit Suisse is the bank subsidiary of the ultimate parent, Credit Suisse Group. Credit Suisse has dozens of subsidiaries that conduct most of the firm's business, according to its most recent annual report. The financial institution was charged by the US along with two subsidiaries earlier today.

Credit Suisse assisted US clients in using sham entities to disguise undeclared accounts, failed to maintain US account information and destroyed records sent to US clients, according to court papers filed in Alexandria, Virginia federal court, where the plea hearing took place late this afternoon. The judge accepted the firm's plea.

The bank also helped clients withdraw money from accounts by providing hand-delivered cash or using Credit Suisse's correspondent bank accounts in the US, the government said. The bank structured such transactions in a way that would evade currency reporting requirements, according to the filing.